Melco Crown (MPEL) Lags Q4 Earnings, Sales Beat Estimates

Melco Crown Entertainment LimitedMPEL operates casino gaming and entertainment resort facilities in Asia. In order to cash in on a fast growing Philippine economy and increased tourism, Melco Crown launched its long-awaited new integrated casino resort, City of Dreams Manila. It is a part of the company’s plans to have casinos across Asia.

Meanwhile, Melco Crown earns a better part of its revenues from Macau, the only gambling destination in China. Gambling revenues in Macau may be somewhat be hampered by the anti-graft corruption drive undertaken by the Chinese government, which is still keeping VIP gamblers at bay. Nevertheless, per the Macau Gaming Inspection and Coordination Bureau, gross gaming revenues (GGR) rose in all the three months of the quarter, thereby continuing the revival in Macau. We thus expect the company’s performance in the region to get a boost in the to-be-reported quarter.

Nevertheless, a comparatively better performance at the non-gaming segments like rooms and food and beverages, are somewhat driving revenues. Also, the company’s cost-control efforts including effective management of marketing expenses are boosting profits and margins.

Investors should note that the consensus estimate for MPEL has hardly witnessed any significant movement over the last 60 days. Meanwhile, MPEL’s earnings have been strong over the past few quarters. In fact, the company posted positive earnings surprises in each of the last four quarters, with an average beat of 102.92%. Revenues, however, outpaced the Zacks Consensus Estimate in just one of the trailing four quarters.

We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: MPEL missed on earnings. Our consensus earnings estimate called for earnings per share of 10 cents, and the company reported earnings of 9 cents per share. Investors should note that these figures take out stock option expenses.

Key Stats to Note: Adjusted Property EBITDA was $304.3 million in the fourth quarter of 2016, up 29% year over year. The upside came mainly on the back of increased contribution from Studio City and increase in casino revenues at City of Dreams Manila, partially offset by lower contribution from Altira Macau.

Stock Price Impact: At the time of writing, the stock price of Melco Crown was up nearly 4.5% during pre-market trading hours following the earnings release.

Check back for our full write up on this MPEL earnings report later!

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